One of the major decisions involved in starting and growing a business is how to legally structure the business entity. If one does nothing, then a sole proprietorship is created. This has great flexibility but unlimited personal liability. If one starts a business with another, but takes no legal steps, a general partnership has been created. Again, this offers unlimited personal liability. In contrast, creating a business entity like an LLC takes little effort and offers the owner protection against lawsuits.
In this chapter, we will study many of the legal forms a business may take, with particular emphasis on the extent to which they protect their owners from liability.